Indicators: Sept: 23

Is It Over?

6.7% was the decline in Santa Fe gross receipts tax collections from construction spending, according to September figures

"It’s a pretty unlikely possibility."
—Ben Bernanke, then-chairman of President George W Bush’s Council of Economic Advisers, on CNBC in 2005 addressing the likelihood of a recession caused by a bubble in housing prices

"[F]rom a technical perspective, the recession is very likely over…"
—Federal Reserve Chairman Bernanke in a speech last week

So, “technically” the recession is “very likely” over. Does that mean anything?

Not for the average person, who cares more about job availability and buying power than Gross Domestic Product.

Bernanke’s declaration means even less to Santa Feans. Depending how the New Mexico Legislature deals with the $400 million-plus budget deficit in its upcoming special session, the recession could actually get worse here.

The only sectors to actually add jobs in Santa Fe in recent months were education and health services, according to the Department of Workforce Solutions. The same generally holds true throughout the state. Those are precisely the areas in which some state lawmakers want to reduce funding.

“It’s a choice between health care and education employment, and increasing taxes on higher-income taxpayers. The Legislature can make either choice. If people are laid off, then…job growth will go down even more than it has,” New Mexico Voices for Children Research Director Gerry Bradley says. “What economists call that is ‘pro-cyclical behavior.’ In other words, it’s making the business cycle even worse and doing more damage to ordinary people.”

Bradley, a former state labor department economist, doesn’t expect real job growth until next summer.

As for other local indicators, Santa Fe home sales slowed in August, after rising for the first time in three years in July, according to Alan Ball, who writes a monthly local real estate newsletter. Word around City Hall of promising gross receipts figures for September suggested local spending had picked up. But, according to City Finance Director David Millican, “promising in our context” means GRT revenues are down 6.4 percent compared to last September—but he expected worse.

Will the country ever go back to its pre-recession ways? Before the housing market crash, “the level of debt in the country was out of any historical proportions,” Bradley says. As a result, some economists believe “people will never go back to what they were doing in the early part of this decade.”